State Law Limit On Lien Recovery: Not Applicable When Directly Conflicts With Federal Law
March 23, 2016
In a recent opinion by the Appellate Court of Illinois, McKim v. Southern Illinois Hospital Services, the Court took on the issue of deciding whether or not a state law limitation on lien recovery should apply to Medicare and its recovery of conditional payment claims.
As we all know, under the Medicare Secondary Payer Act (MSPA), Medicare’s recovery of conditional payment claims is limited to the total amount of the settlement. According to the Illinois Health Care Services Lien Act, however, recovery of a medical lien is limited to forty percent of the total settlement or verdict. After the Plaintiff, Edwin McKim, agreed to accept a settlement of $16,000.00 for injuries suffered in a motor vehicle accident, Plaintiff requested, and the trial court agreed, that all of the medical liens, including Medicare, should be limited to no more than forty percent of the settlement, or $6,400.00. On appeal, Herrin Hospital, which held the largest of the medical liens, argued, among other things, that Medicare, Medicare Part D, and Medicaid should not be subject to the Health Care Services Lien Act. In reviewing the plain language of the IL Health Care Services Lien Act, the Court noted that Medicare, Medicare Part D, and Medicaid do not fall within those subject to the Act because they do not directly provide medical care to the patient. More importantly, however, the Court found that the Illinois Health Care Services Lien Act’s cap on lien recovery created a direct conflict with the recovery allowed under the MSPA.
Recognizing the conflict between the two statutes, the Court found that the Federal statute preempts the state statute and modified the trial court’s award to remove the Medicare, Medicare Part D, and Medicaid lien from the list of liens subject to the Act.